Sneakers, Concerts, and iPhones: Inside Gen Z’s Financial Choices
Influencers are pushing clothes, concerts, and other experiences, creating 'FOMO' at a scale never seen before.
advertisement
India’s Gen Z is a mystery for any economist.
They make less money in real inflation-adjusted terms than the previous generation, the millennials, but they spend much more on consumption and experiences than any other generation did.
In fact, they often have huge amounts of debt—credit card payments that they have rolled over, or personal loans they have taken—without a concrete plan on how to pay them back.
By now, everyone agrees that entry-level pay, which is what most Gen Z employees get, has stagnated for more than a decade.
Yet, young people are willing to pay Rs 25,000 for a concert ticket and queue up outside Apple stores to buy the iPhone 17.
For a Gen-Xer like me, this seems completely irrational. But from the perspective of a young Gen Z person, this is the only rational way to behave.
When Playing by the Rules Fails
Financial Nihilism is a set of ideas and behaviours where people stop believing in conventional financial wisdom. It comes from the belief that playing by the rules, being patient, and building brick by brick will no longer work.
They saw their parents and older cousins get rewarded for their hard work.
But now, that social contract—"work hard and you will succeed"—seems to have broken.
Surveys show that most young people are worried about having to take pay cuts or even losing their jobs, rather than getting salary hikes and promotions.
What we are seeing in India is a Silent Resignation among Gen Z.
They are not outright quitting their jobs, but they are emotionally disengaging, barely doing enough to meet the requirements. They feel that working harder or going beyond their brief isn’t going to get them anywhere. Instead, their seniors will corner the credit and the increment.
As a result, a large number of young people from Gen Z have very low expectations of future growth. Ironically, this is happening at a time when they have a lot of faith in India’s economic growth potential.
A Big House or Nothing!
Yet, this is not to say that Gen Z does not want to buy assets. Studies show that most in this group want to own their own homes.
Those who can are actually buying homes earlier than previous generations did.
Yet, a majority have had to postpone their decisions to buy a house because they are no longer confident they can pay the EMIs.
This is why Gen Z is most likely to prefer renting over buying, compared to what millennials preferred when they were their age.
This is unlike their parents’ generation, who bought smaller apartments initially, then sold those, added more savings, and moved to bigger houses later.
A Gen Z person is not interested in saving a small amount to buy a small house somewhere far away from the city center. For them, it is a big house or nothing.
This is consistent with how Gen Z spends their money.
They are willing to spend Rs 20,000 on a pair of sneakers, drop a lakh or more on the latest smartphone, or empty out their bank accounts to splurge on a foreign holiday. But they won’t save that money to pay for an EMI on a small home. It is not worth their while.
They argue that saving and building assets should always take priority over spending on temporary pleasures.
Yet, older people like me forget that our kids were born into a better standard of living than we were. They are used to many more comforts and much better quality products than we were. We cannot expect them to suddenly downgrade and slum it out.
'FOMO' at a Scale Never Seen Before
There's more. Gen Z is being bombarded by consumer culture over social media, which my generation did not have to face.
Influencers push clothes, makeup, creams and lotions, holidays, restaurants, concerts, and various other experiences, creating a Fear of Missing Out or FOMO at a scale never seen before.
On top of that, there is easy availability. When I was young, something I saw on a foreign TV show wasn’t within my grasp. I couldn’t have bought it.
Now, it is easily available online, delivered to your doorstep within days, if not hours. It is easy to say that young people should steer clear of these consumerist traps.
But it is quite another to actually do it, especially when spending on such things determines how socially acceptable you are going to be—whether you get friends or find a romantic partner.
This is the trap Gen Z is stuck in: low income but higher spending needs.
Enter 'Finfluencers'
Indians are betting in large numbers on risky financial instruments like futures and options without having any training on how to handle them.
A Securities and Exchange Board of India (SEBI) report shows that 91 percent of individual traders in the futures and options segment lost money between 2022 and 2024.
In 2022-23, 31 percent of such traders were below 30 years of age. By 2023-24, that number had ballooned to 43 percent.
This dangerous trend has been fueled by the so-called “finfluencers” on social media, who promise to teach tricks to get rich overnight.
Even though the SEBI has recently started cracking down on them, they have most likely already had a huge impact on how Gen Z invests. Studies show that a majority of Gen Z—54 percent, according to a recent IIM Udaipur study—get their financial advice from influencers.
On top of this, Gen Z borrowers are more likely to roll over their credit card debt and use "Buy Now, Pay Later" options to purchase goods and experiences. Gen Z accounts for 35 percent of credit card defaulters and faces interest rates as high as 45 percent per year.
That is the key behind the Gen Z conundrum—spending without earning, investing in the riskiest instruments to get rich quick.
It comes from a loss of belief in the future and an overwhelming sense of YOLO: You Only Live Once.
(The author was Senior Managing Editor, NDTV India & NDTV Profit. He tweets @Aunindyo2023. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)